Arrowhead Pharmaceuticals, Inc. (ARWR) Earnings Call Transcript & Summary

All right. So we're going to start. All right. Hello, everyone, and thanks for joining us at the Morgan Stanley Global Healthcare Conference. I'm Michael Ulz, one of the biotech analyst here. And it's my pleasure to introduce the team from Arrowhead Pharmaceuticals. To my immediate left is Chris Anzalone, CEO; and to his left is James Hamilton, CMO. And just a reminder, the format for today is a fireside chat. But before we get into the Q&A, I just need to read a quick disclosure. For important disclosures, please see the Morgan Stanley research disclosure website at www.morganstanley.com/researchdisclosures. And if you have any questions, please reach out to your Morgan Stanley sales representatives. So with that, Chris and James, thanks so much for sharing your time with us today, and I thought we could start with Arrow Dimer PA, just following some of the updates you provided this morning. So maybe walk us through some of that early data and what it means?

Sure. Thanks again for having us here. It's really a pleasure to join you today. Okay. So the Arrow Dimer PA, I think, was a breakthrough for us and I think for the field for a couple of reasons. One, broadly, this is the first time anybody has shown knockdown of 2 genes with a single molecule using RNAi. And I think that, that is an extraordinarily powerful approach that can be used across indications. And so I think that's important as a proof of concept that we can do this. We have several additional dimers that we are developing as we speak, and you'll probably see those enter the clinic or sell in the clinic next year in 2027. Now more specifically, we're excited about the candidate because it could be a "complete way" to treat mixed hyperlipidemia patients. These are about 20 million people in the United States who have elevated LDL and elevated triglycerides. And these folks can be treated today with PCSK9 inhibitors to lower the LDL portion, but there's nothing to completely treat them. And so our goal here was to be in the ballpark, was to enable -- was to lead to a reduction in LDL that is somewhere similar to current PCSK9 inhibitors and then on top of that, lower triglycerides as well that is somewhere similar to what we're doing in plozasiran as a pancreatitis drug. And I think we hit those in spades. We are seeing at least as good LDL reduction in this population as folks have seen with PCSK9s writ large, and we are seeing similar TG reductions that we saw with plozasiran. And so we go forward with something that we think is really compelling. And James, you want to talk a bit more about the granular data.

Sure. Yes. I think one of the things to emphasize in the data we released this morning was the Aapo B reduction, fairly large ApoB reduction of about 50% and that is a little bit better than what some of the PCSK9 inhibitors have shown in a similar mix hypolipidemia population, and that's likely attributed to what we showed as the PCSK9 effect, but the additional effect of apo C-III knockdown on apo B. So I think this is evidence that you're hitting all of those atherogenic lipoproteins from 2 different pathways, the PCSK9 pathway and the apo C III pathway. And then, of course, these -- the data today were just single-dose data -- the study is fully enrolled, so we should have multi-dose data at a medical conference down the road.

I was going to say, and of course, you never know how good a drug is until later in development, of course. But what we have here, I think, is a really unique situation that at this very early stage in an early in a Phase I study, it appears that we have a drug. We know how our drugs interact with people from a safety standpoint. We've been in thousands and thousands of patients with our GalNAc constructs. And so we feel pretty good about where the safety should go. We know how apoC-III inhibition affects people with plozasiran now in many, many patients. the keys here are PCSK9 reduction and LDL reduction on the one side and apoC-III reduction and targeted reduction on the other side. And we're seeing just blanket consistent good results there. So it certainly feels like we have something that could be extraordinarily powerful for this population. Now we just need time. Our hope here is that we can have this dual regulatory pathway where we can run to 2 pivotal programs. One is based solely on LDL reduction as a primary endpoint. All the PCSK9s were first approved based solely on LDL reductions. That is a year-long study. And by doing that, we think we can get the market fairly quickly and start to penetrate this market while we're doing a cardiovascular outcomes trial. And if you look at inclisiran, that has a run rate of around $2 billion right now and they haven't had outcomes data readout yet. So I think that you can address a sizable part of this market fairly quickly based solely on the biomarkers.

Yes. Can you just talk a little bit about some of the dosing intervals you're exploring or what that might look like and when we might see that data?

Sure. Yes. So the single-dose cohorts enrolled sequentially. And what that means is that we have different lengths of follow-up right now at each dose level. Based on the duration we've seen for the majority of the dose levels, we just don't have duration for the top dose level yet, but I think we're looking at quarterly at the most frequent. We'll see if we can push that to every 6 months as the data come in, but I feel confident around quarterly dosing. And we'll talk more about that when we present the data at a medical conference down the road maybe Q4.

Yes. And in terms of the path forward, Chris, you mentioned there's maybe a quicker path with LDL reductions. Would that be sort of the next step after this study, you go right into a pivotal? Or is there more work that needs to be done prior to that?

There's a baby step before the pivotal. I think our plan would be to amend the current study to add a Part III, right? Part I was single dose. Part II was the 2 dose. And then Part III would be a study that probably looks something like our SHASTA-2 study, different patient population, though. We're enrolling mixed hypolipidemia population into Part III of this study maybe you look at 2 or 3 different dose levels, treat them quarterly for a year and just build that safety database and really understand depth and duration with multiple doses, safety with multiple doses before you then go into pivotal Phase III with LDL as a primary.

Yes. Makes sense. And Chris, you talked about other potential dimers you may consider. I guess, I don't know if you can give us a flavor for what those might look like. And kind of what's the trigger to start advancing these other programs? Is there some more data you want to see with dimer PA before you have the confidence to then move into others? Or maybe your thoughts there.

Yes. So you may have heard us talk about this in the past. We're an and company, we're not an or company. And so we were doing a lot of that development at risk. Now it is -- it makes us feel good that those data look good. But we were planning on those data working out. And so we've spent a lot of time on developing a number of different dimers. For instance, we will have some obesity and mash. Inhibin and ALK7 are interesting targets. Inhibin, it looks like more for MASH ALK 7 could be more for obesity. And we are developing dimers on both those sides. There are also additional dimers that we're developing on the cardiovascular side. And so you'll hear more about these in 2027. We have not talked about what the next ones are going to be, but you'll hear more in 2027.

Okay. Great. Maybe we can switch to just plozasiran. Obviously, a lot of interest there, large market opportunity for you guys. You're currently launching in FCS. So maybe let's just start there and talk about some of the dynamics you're seeing, payer coverage, et cetera.

Yes. So the launch has been smooth. It's been about what we expected, maybe a little bit faster than we expected. I think that we are learning that there are more clinical FCS patients out there than we first anticipated. That's a good thing. And so we have ramped up our sales force a bit more quickly than we had expected. That's also, frankly, a bit defensive as Ionis launches Tingo and SHTG. We didn't want to be out there. We don't want to be outgunned, if you will. So that has gone well. Payer interactions have been good, and we've got -- we have policies for most payers at this point in FCS. That's been good. We're now shifting our attention to SHTG. We've got good data that you probably want to talk about and James can fill you in on SHASTA-3 and 4. And so we are moving as quickly as we can to SHTG approval. In fact, we acquired a priority review voucher to speed that process up even more. We think that's important because I think we have something that is powerful here, and we have a good value proposition. And the quicker we can get to those patients, the better. They're waiting for good treatments. And I think we've got one. We're really happy with the way this -- the profile looks right now after SHASTA-3 and 4, have you talk about that more after James goes through it.

Yes. So just a quick overview of the SHASTA-3 and 4 data, triglyceride reductions 80% from baseline, which we were really pleased with. And then that translated as we anticipated into a statistically significant reduction in the AP event rate and then also a statistically significant reduction in the time-to event or improvement in the time-to event rather. Additionally, we saw large improvements in the number of patients that were reaching goals, both less than 150 as well as less than 500. And then probably 1 of the most important aspects of the data, the pooled cohorts or the safety data that we didn't see any signs of hypersensitivity or any anaphylactoid reactions, no thrombocytopenia and really a pretty quiet liver safety profile. There was no statistically significant difference between active and placebo in terms of liver fat changes and then the transaminase change was pretty placebo-like as well for the active group.

And we think our value proposition here is you could not be clearer. We think there's about 3.5 million people with trigs above 500. We know that above 500, there is substantially increased risk of acute pancreatitis. We saw an improvement in pancreatitis risk, in the study in a broad population as well as in the high-risk population. We are -- this drug appears to be safe, simple and strong. It is our safety profile, as James said, is sterling. We saw no hypersensitivity, no thrombocytopenia, no increases in liver fat. No real increases in transaminases. It's a simple therapy. It's a once-a-quarter dosing not once a month dosing. We don't require we do expect to acquire any transaminase monitoring and changing of doses that simple and it's strong. We just -- we see better trig reduction than anybody else in the field. And so we think that this is a profile that just fits really well with frankly, the broad population, but at least early times in the high-risk population. These are people with triglycerides above 880 with or without pancreatitis as well as those above 500 with history of pancreatitis.

Can you talk a little bit more about the differentiation. You mentioned several of these points already, but just what do you think is the most important piece of the differentiation and what are the other areas where you're different?

Again, we're and company, we're [indiscernible] company. I think holding all these together make it a differentiated product. But let me take a step back. So Ionis has a product that is good. This is a drug that works. And I think it's going to help a large swath of patients. And I think that it's a good thing that both of us are promoting these 2 good drugs because this is an education play. I think there's an awful lot of patients who need to have their triglycerides under control, and we need to help the world appreciate the importance of that. Having said all that, I like where we sit among the 2. Our safety profile is, I think, clearly better our therapy is clearly simpler because of monitoring because of convenience of dosing. And historically, we've been substantially stronger in lowering triglycerides.

Since you shared the detailed results at ESC, maybe just chat about some of the doctor feedback you've gotten on your profile.

Yes. I think in general, it's been consistent along the lines of what we were getting post FCS approval, I think, with an emphasis on the favorable safety profile that, that makes things easier for physicians, for prescribers if they don't have to worry about patients bouncing back with transaminase elevations or injection site AEs or thrombocytopenia that it makes their life, in general, easier not to have to worry about those things or to have to worry about dose adjustments. We have one dose that was studied in the study.

Yes. And also, I think that the pancreatitis data were helpful. It wasn't -- so we had a we had a very strong risk reduction in the high-risk population. We had no events in the high-risk patients on basin. But we also showed that patients with triglycerides between 500 and 880 also do get pancreatitis. And I think it's important for the field to see that, that it's not just those patients with trigs above 880 that need to be cared for. Those patients with trigs between 500 and 880, also we need to get their triglycerides under control to decrease the risk of pancreatitis.

Can you also just touch on pricing, right? You kind of set the price before you had the final data. So what -- any updated thoughts there? How are you feeling about current pricing?

The price right now -- the net price is $400 per year, and we think that's priced right. This, to us, feels more analogous to a mass drug than a cardiovascular drug. Our challenge was this. Triglycerides show up on a lipid panel. And so people jump to, "Okay, well, this is a lipid drug, and therefore, this price band makes sense." Well, that's not exactly the case area. This drug is not intended to decrease the risk of cardiovascular disease. This drug is intended to decrease risk of pancreatitis. It's a pancreatitis drug. And that is a severe medical condition that is expensive and painful and can be fatal. And given that and given how strongly reduced the risk of pancreatitis, this to us makes economic sense. Our number of patients needed to treat was 3 in the high-risk population. That's a really compelling value proposition when one bout of pancreatitis can cost upwards of $60,000 or $80,000. And that's -- and this number of patients needed to treat is after only 1 year. Who knows what that's going to be over 2 or 3 years. It could be even more compelling than that. In fact, SHASTA-5 is an event-driven study. And so we'll have more data on a longer-term number of patients needed to treat for that, I think.

Yes. I guess maybe when you when you're launching next year, obviously, you mentioned Tringoldis out there, so there's a competitor there, a little bit ahead of you, but you made up some time with the PRV. I guess where do you expect REDEMPLO to kind of be used relative to Teng?

In terms of market share?

Just patient population, are you going to get switches? Is it more high risk? Is it water?

Yes. So our commercial focus now is not switch. We will see those, but that's not our focus. Our focus is bringing this drug to patients who need it. We are starting discussions with payers now on contracting in SHTG. I think we can do that right now because we have the priority voucher. I think without that, we probably wouldn't be able to have those discussions quite yet. I think that's a help for us. I think that could help our launch, and it could be a bit of of a quicker launch given that, but let me just temper expectations. This is not one of those launches that is going to be a hockey stick, I don't think. It's a slow burn over the next couple of 3 years because it is an education play. Now sure, there is a bolus of patients that are high risk, have history of pancreatitis. These patients and their physicians are actively looking for treatments. And so yes, they are out there and they should be fairly easy to convert. But these patients aren't seeing these physicians quarterly or even every 6 months. They're seeing them maybe once a year. And so it's just going to take some time to bring this drug to them. And again, as I mentioned, look, I think that it is helpful to patients, it's helpful to the health care system to have 2 drugs that both work. And so having Ionis out there promoting is a good thing for all of us and a good thing for patients.